The Economic Challenge for the Ummah

[Condensed from a talk by Justice Mufti Taqi Usmani,
delivered at the International Conference of the World Muslim
Congress.]

The nineteenth century was a century of political oppression
whereby the powerful Western nations enslaved most of the
Asian and African nations including a large number of Muslim
countries. The present century, which is nearing its end, has
witnessed the gradual independence of these countries from
Western imperialism. However, despite our apparent success in
achieving the goal of political liberty, we could not succeed
in acquiring independence on intellectual, economic and
strategic levels. That is why Muslim Ummah could not yet reap
the fruits of its political freedom.

Now the Muslim world is looking toward the coming century with
hope that it will bring for it total independence in the real
sense so the Muslims may find their due place among the
nations of the world and may be free to live according to the
Quran and the Sunnah of the Prophet, Sall-Allahu alayhi wa
sallam.

However, this hope cannot be realized through wishful dreams.
We will have to work hard for our total freedom even more than
we did for our political freedom. We need a total revision of
our strategy, a well-considered plan, a collective resolution,
and a revolutionary approach.In this paper, I would like to
confine myself to two major issues.

· Self-Imposed Dependence

It is common knowledge that Ummah's basic economic problem is
the dependence of the Muslim countries on others. Most of the
them are borrowing huge amounts from the rich Western
countries. Some countries are incurring these heavy
interest-bearing loans not only for the development projects,
but also for their day-to-day expenses, and what is more
serious, for the payment of interest accrued on their previous
loans which keeps the size of their indebtedness
ever-increasing through a vicious circle.

Dependency on foreign loans is the basic disease of our
economy that has not only shattered our economic life, but has
also devastated our self-determination and has forced us to
submit to the demands of our creditors, sometimes, at the
price of our collective interests. It is no secret that the
creditors impose their own conditions before they advance a
loan. These conditions keep us under a constant foreign
pressure, often stop us from pursuing our own objectives and
force us to follow the policies dictated by others. The evil
consequences of dependence on foreign loans are too obvious to
need any further elaboration.

Islamic teachings consider "Indebtedness" as a detestable
phenomenon, which should not be resorted to except in cases of
extreme necessity. The Prophet, Salla-Allahu alayhi wa sallam,
even refused to offer the funeral prayer for a person who died
before paying back his loan.

Moreover, the Muslim jurists have discussed whether it is
lawful for the ruler of a Muslim State to accept the gifts
offered by a non-Muslim. The answer: It is lawful only where
the acceptance of gifts does not result in any kind of
pressure against the interest of the Ummah.

Islamic principles require that the Muslims should avoid
incurring foreign debts, even if they face some hardships. But
our present indebtedness was not created by lack of resources.
In fact, the Muslims have never been so resource-rich. They
own enormous natural resources. They occupy important
strategic positions on the globe. They are joined together by
a geographical chain from Morocco to Indonesia, broken only by
India and Israel. They produce nearly 50% of the oil of the
world. They are said to account for more than one third of the
world's export of raw material. What is more, the cash they
have invested in the western countries alone may be more than
sufficient to set off their total liabilities.

According to a recent report of Islamic Development Bank, the
total external debt of the IDB member countries in 1996
amounted to 618.8 billion dollars. The deposits and assets
kept by the Muslims in the Western countries are said to be
much more than this amount. Obviously, there is no authentic
record of such deposits, because their owners do not disclose
them. However, the economic experts have estimated them to be
between 800 and 1000 billion dollars, out of which 250
billions are said to be taken back by the Arabs to their own
countries after the Gulf War. Practically it means that we are
borrowing a part of our own money at a high rate of interest.

Even if these estimated figures are taken to be exaggerated,
one can hardly deny the fact that had these huge amounts been
kept and properly used within the Muslim world, the Ummah
would have never resorted to incur the debt of more than six
hundred billion dollars.

Our dependence on foreign loans is self-imposed for which we
cannot blame anyone but ourselves. We did never probe in to
the factors underlying the flight of our capital. We did never
try to remove those factors and instill confidence in our own
people. We could not deliver ourselves from the corrupt and
oppressive system of taxation. We were not able to create a
peaceful atmosphere for investment. We could not provide our
countries with stable political system. We did not bother to
create opportunities for the sound utilization of capital and,
above all, we failed to mobilize the spirit of Islamic unity
and to activate the strength of the Muslim Ummah as a whole.

The tragic situation cannot be corrected by expensive
celebrations at the advent of the new century. We will have to
take the challenge of time seriously. Our economic and
political leadership will have to find ways and means to free
ourselves from dependence on foreign countries. We already
have the basic resources for that. All we need is to design
new policies to utilize the wealth of the Ummah within the
Muslim world, and to develop the concept of Islamic
brotherhood and mutual understanding and cooperation.

The Quran says: "All the Muslims are brothers." Quranic
injunctions and the Prophetic teachings require that the
Muslim Ummah should act as a single body. The geographical
barriers should not divide them into different nations with
conflicting objectives. The political boundaries may only be
tolerated for the internal administrative affairs of each
country, but all the Muslim countries must have a united face
at least with reference to the common objectives of the Muslim
Ummah vis-à-vis the rest of the world.

Gone are the days when technical know-how was the monopoly of
a few Western countries. Now, the Muslim talent is capable of
at least handling the immediate requirements of the Ummah.
What we need is to seek this talent, and to put it to the
service of this Ummah with a missionary zeal.

But all this requires the unified efforts from the leadership
of our countries. This is the biggest challenge faced by them.
They must meet it, not only for the betterment of the Ummah,
but for their own survival. A great responsibility, in this
respect, lies on the shoulders of OIC, which should take the
initiative and create a Muslim talent pool to design new
policies for the Ummah as a joint body.

· Restructing our Economic
Systems

The twentieth century has witnessed the rise of communism, the
conflict between capitalist and communist countries and lastly
the fall of communism. The capitalist Western countries are
celebrating the fall of communism as if it was an empirical
evidence of their own victory, not only on a political front
but also on ideological plane. The fact is, however, that
communism was based on an emotional reaction against some evil
consequences of the capitalist economy, specially, against the
element of inequitable distribution of wealth, which has been
experienced in the capitalist countries throughout the
centuries. The failure of communism was not due to its
justified criticism of the evils of capitalism. Rather it was
caused by the inherent defects of the alternative system
suggested by it. The capitalist economies still suffer from
inequities in the distribution of wealth. There is still a
large gap between the haves and the have-nots and 'poverty in
the midst of plenty' is still the major problem of their
economy. These are the real problems created by capitalism and
unless they are satisfactorily solved, it may give birth to
another reaction that may be more aggressive than communism.

The world, therefore, is badly in need of a Third Economic
System. The Muslim Ummah can work out this system based on the
Islamic norms. The economic principles taught by the Quran and
Sunnah of the Prophet (Sall-Allahu alayhi wa sallam) are quite
capable of solving the major economic problems faced by the
world today. While they allow private ownership and market
economy, they also provide a well considered system of
distributive justice, which may eliminate the inequities and
bring about a system in which profit motive works with the
collective interest of the society. The basic fault of
communism was that, frustrated with the inequity of
capitalism, it assailed the very institutions of private
ownership and market forces and developed a utopian idea of
planned economy which was unnatural, artificial and
oppressive. The denial of individual liberty curtailed the
zeal for production and the wide powers of the state left the
destiny of the people in the hands of the ruling class.

It was neither private ownership nor the institution of market
forces that was the basic cause of injustice in the capitalist
system. The basic factor for creating inequities in the
capitalist countries was the absence of a criterion to
differentiate between just and unjust earnings. The
instruments of interest, gambling, speculative transactions
and the tools of exploiting immoral desires of the consumers
to secure huge profits were allowed, which tend to create
monopolies and in turn paralyze the forces of demand and
supply or at least obstruct their operation. It is thus
ironical that the capitalist theory on the one hand asserts
the principles of lassiez-faire but, on the other, by allowing
the aforesaid instruments, interferes with their natural
function and stops the market forces from playing their due
role by creating monopolies that impose their arbitrary
decisions on the bulk of the common people.

The system of interest favors the rich industrialists who
benefit from the wealth of the common people who deposit their
savings in the bank, and after making huge profits do not
allow the common people to share these profits except to the
extent of a fixed rate of interest that is again taken back by
them as it is charged to the cost of production. At macro
level, it means that these rich people always use the money of
depositors for their own benefit and in reality pay nothing to
them because the interest payments are always added to the
cost of production. Similarly, gambling is a major instrument
for concentrating the wealth of thousands of men in a few
hands and for promoting the disastrous motive of greed for the
unearned income. The speculative transactions are also a major
source of disturbing the natural market operations and
contribute to the inequities in the distribution of wealth.

Islam not only allows the market forces but also provides
mechanism to keep them operative with their natural force
without their being hindered by monopolies. It applies two
types of controls on the economic activities.

First, it subjects the process of earning to certain divine
injunctions, which clearly define the limits of halal and
haram. These injunctions tend to prevent monopolies and curb
the unjust and immoral earnings and commercial activities
detrimental to the collective interest of the society. In the
context of modern economic needs where the savings of the
common people are activated to boost development, the use of
the Islamic instruments like musharakah and mudarabah, instead
of interest, may make the common people directly share the
fruits of development which may bring prosperity in a balanced
manner reducing the gap between the rich and the poor.

Second, the institution of zakat, sadaqat, and certain other
financial obligations provide that even the halal income is
again distributed to the persons who could not earn enough due
to insufficient market opportunities. Through the twin
controls, the wealth is kept under constant circulation and
the chances of its concentration are almost eliminated.

But our main tragedy is that the principles of Islamic economy
are still in theoretical form for which no living example is
available. The Muslim countries have not tried to structure
their economy on Islamic basis. Most of them are still
following the capitalist system and that too in a half-baked
manner, which has made the economic atmosphere much worse than
that of the developed capitalist countries. Unfortunately,
despite having the clear cut Islamic injunctions, the
inequities existing in Muslim countries are far more severe
than in the Western world.

This tragic situation cannot last forever. If we are not
prepared to mend our ways, some natural process of revolution
is bound to find its way. If we want to avoid disastrous
consequences of such revolution, we'll have to restructure our
economic system on the basis of clear guidance provided by the
Qur'an and Sunnah. Our success in setting an example for
implementing the Islamic principles will be our best gift to
the human fraternity at the advent of the new century. I hope
that if the principles of Islamic economy are implemented
sincerely, we'll find the world more receptive to them today
than we experienced it in the past.